tv Bloomberg Markets Bloomberg August 20, 2015 2:00pm-3:01pm EDT
market day. matt: we are watching headlines for you out of greece. scarlet: clash along the korean border. the most serious exchange of artillery fire in five years. we look at impact at the region. president john hofmeister weighs in on where oil will go. good afternoon. i am matt miller, here with scarlet fu. scarlet: let's look at the markets. it is a down day across the globe when you look at equities. the dow off by 217 point, off the session lows. that was about an hour ago. in the s&p 500, nine out of 10 groups are lower.
and european stocks also losing ground, down 2.1% by the close. come inside the bloomberg terminal for a moment. this is another way of showing you how much red there is on the screen. t, if you look at the major market indexes, no major market is showing again right now. index is theorming nikkei, which is only down by two point 7%. treasuries extending their advance especially at the long end of the. the two year yield moving up 67 basis points. a reversal of yesterday's trade. a question whether the fed has the ammunition to move ahead with a september increase. matt: we will continue putting
those questions to investors throughout the day. now our top stories at the hour. grease up's prime minister and has announced his resignation, 'searing the way -- greece prime minister has announced his that histion resignation, clearing the way for a new election. alexis tsipras has lost the support of his own party, syriza . he has been working with greek independents. a date for the elections, but government officials we've spoken to a bloomberg news to less they will be held on september 20, and greece also made payments to the ecb and imf. they turned around and sent that first payment directly back where it came from. scarlet: we will have more on the greek situation surely. the chinese central bank
injecting the most money and open market operations since february. earlier we spoke about china with the pimco managing director rich clarida. that awkwardoing transition from a closed economy to a much more open economy and they are struggling with that transition. weekend 3%e yuan last week after china devalued the currency. 2% in july, the most since 2007. economists predicted a decline. we spoke to the pimco managing director and cio of local credit. he is bullish on housing probably and seize opportunities in the sector. look atf you opportunities, owning a house today is incredibly cheap.
it would take a 2% rise in mortgage rates to go back to the long-term average. so, a very modest pickup in mortgage rates, which by the today, thater 4% can be handled in an economy which is adding 2.9 private sector -- 2.9 million private sector jobs alone. it accounts for 90% of the residential market. matt: the number of americans filing for unemployment benefits remained historically low. since march the total has stayed below 3000, the number typically associated with an improving just markets. and the weather channel may be up for sale. bloomberg news reports that the owners have hired morgan stanley and partners. the weather channel is owned by nbcast, who is owned by universal. one possible option is selling only the digital business, which has a higher value than the
television cable channel. those are the top stories we are following for you at this hour. -- aftercoming up sprout pharmaceuticals viagraed its female drug, valeant swoops in. and the koreans clash. all of that and much more coming up on the bloomberg market day. -- right, to our top story greek prime minister alexis tsipras is looking at elections next month as he tries to tackle a rebellion within his own party. he was elected in january on anti-austerity platform, but last week approved sweeping economic overalls to get another bailout. guest is a professor
of economics at the annualized stern school of business. he joins us from california. -- there are a lot of questions we have here. i don't really know the answer is, howthe main one -- howectricity burress does alexis tsipras intend to stay in power if he does not of syriza?pport will he run as an independent candidate for prime minister? what does it look like? he plans to put in new candidates of his own choosing for mp's and try to run the selection on his own popularity, and right now it looks like he might win. looks like he now might win. we are looking at, what, september 20 election date? matt: yes. scarlet: is that enough time for the rebels and the syriza party to organize and come up with their own leader, proposed
leader? guest: they will try, but it will be difficult for them. this is one of the reasons he is doing the election very quickly. another reason is heavy taxes will come with the agreement and have not been fully and plummeted yet. therefore the public does not feel them that much yet. that is the second reason for doing it very, very quickly. so, these are reasons that are very good for mr. tsipras. economy is ravaged by political and economic uncertainty. there have been capital controls. withdraw 50 or 60 euros from atm machines per day. these are horrible conditions. the demand, the consumption has decreased. even exports have decreased the cause they depend on -- because
they depend on imported raw materials. valuations have collapsed. this is a situation that is really desperate in the greek economy. adding more and certainty is not a good idea. is it the idea, professor -- they are going to have elections at some point anyway or if the better, as you say. the greek people have not felt the full weight of the tax burden they are going to face, not that the greek people have ever felt the full weight of the tax burden. but he's got to do it soon. that way he has a mandate to ride through the rough times. guest: i think a better solution might be to create a correlation -- coalition of the broad european parties, including those who did vote for the bailout, including the opposition parties, and tried to create a grand coalition, which stronger, rather
than have elections, divisiveness again, uncertainty alexisand hope that tsipras will be elected, or whoever gets elected will be pro-european. that?why doesn't he do he has been such a pragmatist over the last few weeks? yes, he has been a pragmatist, but at the same time, he seems to be a party person. his own party person. he does not want to make deals with other parties, and i think that is who he is area he will try to see if he gets reelected, if he gets a bigger majority. if that does not work, he will try to make a coalition, but he is hoping that it will work and he will be the ruler. what does this mean for foreign investors, what does this mean for the troika, the ecb, the imf? guest: it means the greek
economy will be in worse shape of the end of september and they might need to invest more money and loans available to greece. the uncertainty part will mean everything will freeze. there is going to be more unemployment, a deeper recession by the end of the year. that the real problems european union will have to face, because right now, the european union is the lender of last resort for greece. this is how greece survives with the loans from the european unit. matt: i wonder how long it will be before greece needs another bailout, or do you think we will see meaningful debt reduction before that happens? guest: debt reduction we will not see. debt restructuring, we will see, in allocation of the maturities, a longer grace period, maybe 20 years, for greece. that will work. but ultimately cut --
iternately, greece will make by reforms at the microeconomic level. are we going to allow for more competition? these will be the issues that will make the economy stronger and growing, so they will be the debt.y just reducing the debt here and there is not going to fix the problem. if it does not happen, it will always need another bailout. matt: all right, thank you so much for joining us from nui stern school of business dish -- in you -- nyu's school of business where he teaches economics. scarlet: very timely. valiant promise of the goals and buys sprout.
matt: welcome back. i am matt miller here with scarlet fu. scarlet: we are going to head over to julie hyman. read across the screen. none of i were saying, the major indexes we track has had a gain. it's been a pretty depressing month and it's only been accelerating. there is not been one specific catalyst. there is a siri -- there is a series of valuations, but it's over globaloncerns growth. all of this coming to a head almost today. we are seeing volume up, stocks down. down 249 points.
take a look at the dow intraday. we have seen it bouncing along, but really bouncing along near the lows of the session. it reached the low just before low p.m., but it is at levels. we have seen the worst performing averages since jane merrick. what is going on here? some of the worst performers are the to date.ormers year netflix is down 8% and the worst performer in the s&p 500. amazon, number two best performer, down 3% today, and martin marietta, a maker of materials, up to present for the year, down 2% today. the year, down 2% today. and really contributing to declines, consumer discretionary's. graded over ate bernstein, the analyst --
downgraded over bernstein, the analyst signing the alarms about the switch from ad supported television to non-ad supported television and these guys need to catch up to what the streaming services are doing. ratedm is -- viacom is and reform over bernstein. , micron will be down to present. other services getting a downgrade. sandisk. a lot of concern about the memory chip industry. overall when you look at chips, there has been a dismal t performance. take a look at my bloomberg terminal. what i have highlighted, the performance since june 10. since then, it is down 19.5
percent, getting ever closer to a bear market in semi-conductors. thank you so much. 19.5% down for stocks. matt: it's rough. scarlet: all right -- matt: i just want to get to this segment. there semi-questions i have not asked yet. scarlet: the fda approves the female libido drug. addresses the syndrome in premenopausal women. it is a condition we have understood medically for almost 40 years, but not until yesterday that we finally have a treatment option for women. sproutnd this morning became the latest takeover target of valeant pharmaceuticals. they plan to buy sprout for $1 billion in clash.
before we get to the purchase -- reporter: i am terrified. want to know. i have read a lot of media out of europe on this. they seem even more skeptical than we are. a lot of people say it's not going to work, it does not work that well, and if it does, the woman will likely fall asleep because it causes dramatic tiredness. this is a drug that comes with a lot of side effects. it has limited effectiveness. it seems what we are hearing from the trials is it works pretty well for some women. for most, you are seeing a modest spike. it does not work at all for others. there were a lot of restrictions on out as prescribed. doctors will have to take a class online and do a quiz -- matt: then the woman cannot drink alcohol, she cannot take birth control, she is liable to faint at any point. scarlet: there is a long list of
limitations. our people just extrapolating what viagra did for pfizer and thinking it will do this for valeant? people did not want to have sex for one reason or another, and the struggle help them. but that is where the similarity and's. the case of the mind is willing, the body is weak. for this drug, were talking about some thing going on in the brain, the narrow chemistry, and that's what they are trying to treat. the drug was originally developed as an antidepressant. we do not necessarily understand all of the mysteries of human desire -- desire.pecially female there are no mysteries with male desire. scarlet: speak for yourself. matt: if someone was to calm out, thou wants to buy sprout for a billion dollars. is this going to get done? it well. it looks like
valeant has had issues where it was more hostile. they started walks a few -- they started talks a few weeks ago. some riskshere are for this, right? the company is not allowed right now to advertise. no consumer ads. that will be interesting when they come out in 18 months. maybe we will revisit that. there's a competitor trying to develop a drug that could be on the market may be around 2018, and there are questions about how many women are going to say, i'm willing to take this drug every signal night before bed, take the side effects -- matt: not drink. reporter: maybe have the chance for efficacy. on record going to go and say if a woman is truly in love and happy, as if nothing is messed up in her head as far as other things, then she does not need anything. fortunately you are not
a doctor and neither am i. so -- matt: thank god i'm not a doctor. scarlet: thank you to drew anderson. matt: that was not so bad. scarlet: drew is wedding. -- drew is sweating. almost three quarters of those the cost ofled prescriptions unreasonable. most want the government to control prices am especially for seniors and the seriously ill. on theoca-cola's going offensive about his health and nutrition efforts. the new york times published a story last week about their funding. but the ceo says the company will publish a list of health and research activities that it has funded. you just wait. scarlet: you just wait. and the annual summer festival
-- highlighted by the attraction human towers. thousands went to watch. the teller as a base and the rest of the team moves of the tower in position and at the very top is a child. when the child gets to the top and holds up four fingers, the tower is done and then they figure out a way to it everybody down safely. that is where the real adventure begins. matt: therein lies the rub. scarlet: much more to come -- livesas the population longer and longer in china, it's causing the government to get rid of an old 1980's tradition. ♪
if they can drive, they can't spend. matt: that's critical. japan's elderly have the strongest purchasing power in the country of any cohort. their liabilities are considerably lower than the rest of the population. scarlet: they are giving up driving also because the elderly get into the most crashes. matt: you hope they are not driving. scarlet: for the safety of everyone. but japan is now downgrading the gifted gives to people who turn -- the gift it gives to people who turn 100 years old. given anally, they are plate that is equivalent to 65 u.s. dollars. as the burden increases for the government, they do not want to pay that much, so they are downgrading to something cheaper. matt: do they get it personally? does someone from the government
personally handed over to the 100-year-old person? scarlet: i don't know about that. matt: i only ask because there was an exposé in the new york times a couple years ago that said a lot of japanese families will fail to report the death of an older member -- here are the numbers. this is amazing. 100 wereose who turned women. that is compared to 53. by 2018, the government expects there will be 39,000 people to turn 100 years old. scarlet: that's a lot. matt: -- that's a lot. scarlet: a lot more coming up on the bloomberg market day after this. ♪
stories. former president jimmy carter held a news conference to ascuss his health after surgery discovered liver cancer that has spread to other parts of his body. they did anrter: mri and found there were 4 spots of melanoma on my brain. they are very small spots, about two millimeters. i get my first radiation treatment for the melanoma in my brain this afternoon. is 90 years carter old. he said he was scaling back his work with the carter foundation. both died ofrother pancreatic cancer. his mother also had the disease. president needs just ate the senators to sustain
promised to veto if, as expected, the republican-controlled congress passes a resolution relate -- month.ng the deal next germany plans to take an 800,000 refugees this year, roughly 1% of its population and 40% of all refugees in the eu. german interior minister says other countries must do more to help. and along the korean order today, the most serious exchange of artillery fire in five years. korea firing a rocket that prompted south korea to unleash a military barrage rid no word on whether there were casualties. soldiers were wounded by landmines in the demilitarized zone. for more, i want to bring in the senior vice president of the korean society here in new york. what is you are read on this clash, the first armed clash in five years? why now?
guest: this is important because it brings back the very real notion that things can explode any minute, and while one does not want to overstate the case, the north koreans are feeling very vulnerable at the moment. the 70th anniversary with the end of the war, the 70th anniversary of their party in two months, they're trying to show force. scarlet: does this show frustration on kim jong-un's part? guest: sure, they are frustrated with the u.s. military ordination. kim jong-un has houston about 60% of his senior military. as a result he is probably trying to look strong. scarlet: what is the pattern of escalation you would be expecting here? guest: hopefully we won't see much more of it. that would be a good thing. started small in terms of the tragedy august 4, with the
landmines, it escalated. koreannately with the peninsula, things can escalate, especially if there is a missile test around the anniversary in october. anrlet: has there ever been instance where south korea is the clear instigator? guest: no, that is not the case since the korean war when north korea instigated hostilities. young, untested leader. there may be pockets of resentment. i can make for an unstable north korea in a region with a lot of economic instability. we certainly do not want that kind of political instability. brought i am glad you that out. china's slowdown has freed up a lot of questions around the region. the numbers show that china is north korea's biggest trading partner. put those numbers in context for us. is clearly depended
on china. they are fiercely opinionistic but very on china. 42% of their exports go to china. the only other real player would be russia, which is having its own troubles. that could get worse as the economy gets worse. north korea, they are in a bind. reaction. a lot of turning to external military is oftentimes what they do. scarlet: how to south korea fit into this, too? aest: china is doing tremendous amount. the chinese and the south korean presidents have met to ask time since they assumed office. veryhat relationship is smart. they have $15 billion in annual trade. with the new agreement inked in june it could go well over $100 billion. $8 billiont to
optimistically between north carolina -- north korea and china. scarlet: one issue on which they are all in agreement, japan's historic atrocities against them. japan's celebrating the end of world war ii with a live -- chris celebrating the end of world war ii with a promise from a hard rock band. this islaibach -- this is laibach. they performed from the sound of a beatles song, and their own version of "the final countdown." kim jong-un is opening up to western influences. guest: some western influences. dennis rodman. if you watch clips of the
mutedmance, it fell on appreciation -- did not the audience look convinced. look at that. they look board. they were not thrilled. they said it was interesting. i think we will leave it at that. scarlet: thank you for joining us today. the senior vice president of the korea society. we have breaking news on twitter. matt miller is that the breaking news desk with details. you look at twitter share is, they have moved below their price at the ipo back in 2013. 25.98er shares trading at they priced the shares at $26 back in 2013. of course, twitter has gone through a lot of problems. number one, their ceo being sort of thrown out -- maybe not but definitely,
leaving his position because shareholders were not happy with the way the company was performing, but really the problem is user growth was not growing as quickly as investors want to see and monetization even more slowly than user growth. as a result, we now see twitter -- almost two years on, following below -- falling below its ipo price. and by the way, scarlet -- i think most people would greet a laibach concert very skeptically. scarlet: but they said it was interesting. i think most people would say it was more than interesting, no? matt: thank you, thank you very much. scarlet: matt miller, thank you for the breaking news. we're watching oil hover around $40 a barrel. will it fall below that?
a former shell executive weighs in. all of that hard work may not be good for you. the more hours you work, the worse it is for our health. we explain. and manhattan real estate is so hot, developers are scrapping construction plans and selling the land. all of that and much more coming up on the bloomberg market day. ♪
demand becomes over the next several months. the industry is feeling the pain success.n the industry invested billions and billions of dollars to meet global demand based on predictions of global growth. the global growth and demand did not really materialize because economies were not strong enough . now we have the situation where we are overproducing, and nobody wants to cut back, because if anything, they want the cash that comes from the sale of loans or to pay shareholders, whatever it is. at no one was to decrease production until we get more -- more global growth and demands. we see a minor tick up in rig count.
the fact that we see any increase is shocking. operatedmpanies according to a plan in each country has a plan with respect to how much production it wants to make. so, companies on the wrong will want to make their production plan, because that is how they measured. that is what they promise shareholders. what you see is not an anomaly. it is companies performing according to a plan and when they do that, they must have the economics also it up to do it. it may be economics to produce cash. they have loans that have to be covered and they need the cash to do it. or the companies that have achieved amazing productivity improvements and they can afford to drill more and sell more because of the productivity improvements that have lowered cost significantly. olivia: the epa came out with plans to cut commissions from
oil and gas producers by 40% over the next 10 years. how much will that her producers? guest: most of the major companies have been an effort to reduce in missions voluntarily. 14 of reasons. one, the sustainability issue, the knowledge the meat thing eoing into the -- the methan going into the atmosphere cannot be good. but there is a market for the gas. let's get some value out of it rather than burn it off or wasted. the whole concept of zero emissions has been in the industry for a long time. industryespects, the is leading the way and government is following. with this government in particular, there is a very strong desire to control the industry as though the industry does not know what it is doing. the last seven years or so, this administration has been determined to tell the industry
what it can and can't do when the industry knows what to do. there may be aberrant operators to there who are resistant regulations just because they do not like to be regulated and those are exceptions in this day and age, not the role in my opinion. that was john hofmeister, ceo of citizens for affordable energy. let's take a look at the bloomberg commodity index. i want to bring in alix steel to give us context on this. when things go down, they have to bounce up a little bit? where youeems like had copper closing, oil around $40 a barrel, you could trigger this as an oversold bounce. but the idea we looking at global stocks falling off a cliff, the ftse in correction territory, global markets getting slammed, that's kind of an astounding factor, with commodities leading stocks down for the last two months. at troy 15 --ook
we talk about this everyday. it has just been down, down, down. , did anyr specifically factor drive it lower? alix: not exactly. if you look at the median forecast from analysts, they are looking for $6,000 a time and in the fourth quarter, so it looked like analysts were expecting the metal to bottom. they are reading about copper in not a very bearish light, highlighting supply disruptions we've seen. higher scrap prices as well. meaning there is not a lot of supply on the market, as we would think, and that has not been factored into the price. scarlet: what about gold? it has gotten a lift with the valuation story.
now it's at a one-month high, it looks like? this is one reason why the bloomberg commodity indexes in positive territory. gold makes a big chunk of that. you did have the lower dollar, comments were interpreted in a more dovish way, and you have a pop in treasuries, as well as piling into gold, and then oversold territory. when it goes down too much, that does inspire some kind of buy. to be a strong buying season as well and china and india are very price sensitive. so, there is some kind of demand response when it turns to gold as well. scarlet: we will see if that sustains itself going forward. alix steel puts hours and hours
into commodity research, and that's not surprising because -- you should listen to this. it may pay to be lazy and not diligent. too much hard work may end up killing you. hours arework longer more likely to develop heart disease. working more than 55 hours a week raises the chances of a stroke by 33%. they have the stats to back this up -- working even one extra hour day increases the risk of a stroke by 10%. alix: this is crazy. researchers looked through 25 studies that looked at people across europe, the u.s., australia. scarlet: this is good data. good data, to track the relationship between health and work. what is interesting, where people work the most. if you work in britain, it is 36.7 hours, six more hours for
people in the netherlands. ok, makes more sense. hours awake.2 they've a bad reputation. that shocks me. i thought for sure, like, 20 hours a week. scarlet: the numbers are high, but maybe some would say, germans would say, those hours are not spend very productively? alix: perhaps. when was the last time you work to a 46 hour workweek? i think i was 22. [laughter] and two bars of chocolate does lower the risk of heart disease. and he more protein to lower the risk. we talked about fish earlier this week. stress, speaking of this is probably causing stress in the market. the dow currently down by more than 300 points. we are at our session lows as those losses continue to deepen. look at that. that is a drop of one and three quarters percent.
alix, i was looking earlier and it looked like utilities were the only group not to decline. that has changed. alton industry -- all 10 industry groups are lower. even your safe havens are caught up in the selloff. there -- the nasdaq that is the worst selloff and you can blame that on -- you've got google, facebook, apple, the big stocks theat led the rally. netflix is coming perry u.s.-led -- perilously close to its 50-day moving average. the same can be said for media stocks. remember, that whole index down by 10%. scarlet: netflix is one of the momentum stocks that helped drive the bull market rally. it's interesting you point that out. the nasdaq, of the three major
indexes, the only one that is still positive, but we are paring that as we speak. twitter at its lows since the ipo. matt miller will be back to talk about that, cory johnson giving us perspective on the trouble that twitter faces as the stock falls below its ipo price. they need to make the money. find out how to monetize their company. thank you, alix steel. she will be back to take you through the market close. the dow jones industrial losing 300 points right now. this is the bloomberg market day. ♪
breaking news. we are watching the markets accelerate with the dow jones down by three to points. we will check in with matt miller who has all of the numbers for us. matt: the tao right now to hundred 85 points -- the dow right now down to hundred 85 points. of course, it has been three most of theines for major averages. the s&p 500 at the lowest level it has seen this session. point 3%. down to you saw most of these stocks off -- the ftse was better than the cac and the dax. and asia and markets kick this off overnight with cause expand -- with cause extend -- kazakhstan allowing its currency
to depreciate by 10%. you can call that devaluing its currency, if you like. that is really what sparked this whole market meltdown. the s&p 500 is year to date. so, if you invested on december 31 of 2014, you are now in the fallen below its 200-day moving average. a lot of people talk about the death cross. average.ay moving that has happened here and it's definitely not a good sign as far as technical traders are concerned. the s&p 500 is off to .9%, the biggest monthly decline since january when it lost 3.1% -- the s&p 500 is off 2.9%. one reason that stocks, especially tech stocks are faltering so much is that twitter shares are falling
rapidly. twitter following below its ipo price of $26. i want tontext here, bring in cory johnson, who has been covering the stock since the very beginning wit was a private company. how much of this is due to -- cory:ay. market said, tesla, twitter, a little more risky there area saw slowing growth in the users. the question was, what can drive more growth? could it be the capital provided
by the ipo? could it view more geographies to move into? in the media and celebrities using twitter, but her moms and having kids, and as the story of twitter has evolved as a public company, we said, hey, kids are not using twitter, th and it's all happening overseas. -- but there could be a positive side. we need to keep an eye on it. scarlet: we will be back with more bloomberg television. ♪
side -- stateside. alix: coca-cola going on the defensive. what we have about the company's next steps. scarlet: we tell you what to watch out for. ♪ as scarlet: good afternoon. ugly day. alix: we want to get straight to a look at the markets because you're looking at an smp off at 1.5%. the nasdaq the worst, down by 2.5%. are raising all the gains for the year. you ct: